FOREIGN DIRECT INVESTMENT AND MANUFACTURING SECTOR PERFORMANCE: AN EMPIRICAL ANALYSIS FROM NIGERIA

Abstract

Foreign direct investment (FDI) has been a significant source of capital needed for manufacturing firm performance in most nations for many years. FDI introduces cutting-edge technological transfer, enhances production methods, boosts competitiveness, and maximizes capacity utilization, resulting in increased output for the manufacturing sector. This study evaluates the impacts of FDI on manufacturing sector's performance in Nigeria. Data were collected, and an autoregressive distributed lags model is employed to analysis the data. The results demonstrated that FDI enhances manufacturing sector performance and that macroeconomic factors have a favorable impact on FDI. A long-run relationship exists between FDI and manufacturing capacity utilization. The relationship between FDI and the performance of the manufacturing sector follows the bidirectional Granger causality. The study recommends that the government to take action to promote trade openness in order to draw in more FDI.

Keywords

• FDI
• Autoregressive Distributed Lags Model
• Granger Causality